AI Structured Summary
Not yet generated for this judgment
Judgment
Dr. Sadhna Shanker, Member
This appeal has been filed under section 19 of the Consumer Protection Act, 1986 in challenge to the Order dated 01.10.2018 of the State Commission in complaint no. 938 of 2017 whereby the complaint was allowed against Municipal Council Bhawanigarh, District Sangrur (Punjab) and the same was dismissed against the SBI General Insurance Company Ltd.
We have heard the learned counsel for the appellant (hereinafter referred to as the ‘complainant’) and the learned counsel for the respondent no. 1 (hereinafter referred to as the ‘insurance company’) and learned counsel for the Municipal Council, Bhawanigarh, District Sangrur (hereinafter referred to as the ‘municipal council’) and perused the impugned Order of the State Commission and the memorandum of appeal.
The respondent no. 3, the State Bank of India (hereinafter referred to as the ‘bank’) was proceeded against ex parte vide Order dated 29.11.2022.
The brief facts of the case are that the complainant purchased an old house and plot of total 210 sq. yds. vide sale deed no. 1857 and 1858 dated 05.02.2015 along with water connection for his own residence. He deposited the fee for approval of site plan for the construction of his house with municipal council and the site plan was approved on 02.03.2015. He deposited another fee for approval of site plan of 1st floor with municipal council and the site plan was approved on 12.05.2017. Thereafter, he approached the bank for sanctioning of house loan and it valued his property to the tune of Rs. 27,90,000/- and it sanctioned the loan of Rs. 13,00,000/- and released the first installment of Rs.3,90,000/- to him. The bank got insured complainant’s house from the insurance company for sum insured of Rs. 24,00,000/- covering all the risk of the house. The policy was issued in the name of the complainant. It is alleged that the complainant spent Rs. 35,00,000/- on construction work and after completion of construction work, he shifted in the said house. He noticed some cracks in the walls as well as in the ceiling of the house. It is further averred that in the first week of April 2017, the walls and one portion of floor of his house suddenly started to subside in a very fast way and whole building developed the big cracks and all the doors became jammed. He immediately called the mason and he also intimated the bank regarding the loss to his house and the bank further informed the insurance company. The insurance company appointed a surveyor, who visited the house and assessed the loss. The insurance company informed the complainant that the loss was not covered under the policy. The complainant again called the mason and the floor was excavated and it was found that there was a pool of water and then informed the municipal council. On information, the officials of the municipal council excavated the common street and found that the main water pipeline of the municipal council was damaged due to bursting of pipes and due to which there was free flowing of water. The said water pipeline was damaged accidentally or due to over-flowing of water in pipes or due to negligence of the officials of the municipal council. The complainant had written a letter to the municipal council and requested to pay the claim amount against loss. The complainant again intimated the insurance company the reason for loss caused to his house and then the insurance company appointed a surveyor, who visited the premises of the complainant and again took the photographs. The complainant got the tentative estimate for repair of the house from Er. Hanish Gupta, who prepared the estimate to the tune of Rs. 27,34,000/- for re-construction of the building by giving opinion that house was no more safe for human habitation and it should be reconstructed. The complainant submitted all the documents to the surveyor of the insurance company vide letter dated 27.04.2017. He also wrote letter to SDM Bhawanigarh and Deputy Commissioner, Sangrur for redressing his grievances regarding the loss suffered by him. He also sent reminder in this regard but no avail. Thereafter, the complainant moved an application under Right to Information Act, 2005 for knowing the status of his application dated 11.05.2017 followed by another reminder dated 05.07.2017. The claim was repudiated by the insurance company on 21.08.2017 on the ground that the loss was not covered under the policy. He immediately approached the bank and requested for settlement of his claim but it refused to entertain his request. He further approached the municipal council informing that his claim has been repudiated by insurance company and refused to pay any claim amount. It is alleged that the house is unfit for human habitation and might fall at any time due to its bad condition and cracks as well as subsidence of foundation and floors but he has no money to reconstruct the house.
Being aggrieved, the complainant filed a complaint before the State Commission.
The insurance company resisted the complaint by filing written statement and stated that the loss has occurred due to seepage of water from sewerage pipe, occurring over a period of time with none of the perils covered under “Long Term Home Policy / Fire Policy” and the said loss is not covered under the policy. Apart from this, the complainant has not submitted the documents as required by the insurance company as well as by its surveyor. It is further stated that the claim is highly exaggerated and excessive as the complainant has claimed more amount than the amount of loss Rs. 1,29,305/- as assessed by the surveyor. Further, the cracks to the building are due to continuous seepage of the water from the leaked sewerage line into the foundation of the building and the same not covered under the policy. It is further stated that the building was to be used for residential purpose whereas the ground floor was occupied as shop, hence, it was used for commercial purpose and hence the complainant is not a consumer. Hence, the insurance company does not have any liability to pay the compensation and the liability is only of the municipal council as it is the custodian, manager and owner of the water as well as sewer lines.
The municipal council also resisted the complaint by filing reply and stated that the complainant had constructed the building in violation of the building by laws and had not followed the site plan and totally changed the nature of the building from residential to commercial and hence, the complainant is not a consumer within the meaning of definition as defined under section 2(1)(d) of the Act. It is further stated that the building is insured with the insurance company and when the cracks were noticed, the complainant approached the insurance company and the bank for redressal of grievances but the insurance company repudiated the claim while the loss is fully covered in the insurance policy. It is further stated that there was a minor leakage of water supply, which was not to that extent which could have led to the alleged damage and that too, the said minor leakage was at a distance of about 20 feet away from the house which could by no means be the cause of damage and the said damage is covered with the insurance policy.
The bank also resisted the complaint by raising preliminary objections that the complaint is not maintainable against it as the complaint did not disclose any cause of action against the bank and the bank is only a facilitator for the complainant to assist him to get insurance policy. It is further stated that there is no deficiency on the part of the bank and the complaint against the bank is liable to be dismissed.
The State Commission, vide impugned Order dated 01.10.2018, allowed the complaint against the municipal council and dismissed the complaint against the insurance company. It directed the municipal council to pay compensation of Rs. 2,37,650/- with interest at the rate of 6% per annum from the date of filing the complaint till actual payment to complainant. Rs. 30,000/- as compensation and Rs. 15,000/- as cost of litigation were also awarded.
Not satisfied with the said Order of the State Commission, the complainant filed the instant appeal before this Commission.
Learned counsel for the complainant has argued that the government approved valuer Mr. Hanish Gupta gave an estimate of Rs. 17,07,000/- for construction on first floor and on the basis of which the home loan of Rs. 13 lakh was sanctioned by the bank. He further argued that the State Commission has not considered the policy in toto and it has considered only five clauses and failed to consider clause 9 which clearly covers the claim raised by the complainant. He furthermore argued that it is an admitted fact that there was a leakage of water from the pipes, therefore, the municipal counsel is liable to indemnify the loss. He further argued that no reasoning has been given to discard the report of government approved surveyor and to accept the loss assessed by the surveyor and the complainant .
Learned counsel for the insurance company has argued that the loss had occurred due to seepage of water from sewerage pipe outside the house and the same was not covered under clause 9 of the policy. He also argued that the complainant did not lead any evidence to prove that the claim under Clause 9 is established. Furthermore, he argued that it is a well settled principle of law that claim has to be specially pleaded and proved by adducing evidence on the point and in absence of that claim will not succeed. In this regard, he placed reliance on the judgment of Hon’ble Supreme Court in the case of SGS India vs. Dolphin International Ltd., Civil Appeal No. 5759 of 2009 wherein it was held:
The onus of proof of deficiency in service is on the complainant in the complaints under the Consumer Protection Act, 1986. It is the complainant who had approached the Commission, therefore, without any proof of deficiency, the opposite party cannot be held responsible for deficiency in service. In a judgment of this Court reported as Ravneet Singh Bagga v. KLM Royal Dutch Airlines & Anr. 4, this court held that the burden of proving the deficiency in service is upon the person who alleges it.
“6. The deficiency in service cannot be alleged without attributing fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be performed by a person in pursuance of a contract or otherwise in relation to any service. The burden of proving the deficiency in service is upon the person who alleges it. The complainant has, on facts, been found to have not established any wilful fault, imperfection, shortcoming or inadequacy in the service of the respondent. ………….”
It is admitted that the loss was caused by bursting of pipeline and due to seepage of water from the pipeline into the foundation of the house of the complainant. It is further argued that even if clause 9 is to be considered, then also that clause does not help to prove the case of the complainant as the same refers to bursting or overflowing of water tanks in the context of water tanks situated above the house on the terrace while in the instant case there was no over-head tanks that overflow but the pipes situated outside the home got burst and damaged the house. The insurance company is not liable to indemnify the loss and the appeal is liable to be dismissed.
Learned counsel for the municipal council argued that the complainant has constructed the building in violation of the building bye laws and totally changed the nature of the building from residential to commercial, therefore, the complainant is not a consumer. He further argued that the leakage was a minor leakage which was about a distance of 20 feet away from the house of the complainant.
The main issue for our consideration is as to whether the claim of the complainant is covered under the policy or not.
The relevant portion of the repudiation letter is as under:
Mr. Ram Chander
S/o Sh. Gej Ram, W. No. 2,
Dhodian Patti Near Jain Mandir,
Bhawanigarh, Sangrur, Punjab – 148026 (India)
Dear sir
Re: Claim No. 366551, Policy No. 3181433, Reported date of loss on 01/03/2017.
This refers to the intimation of the captioned claim dated 07/04/2017 wherein we have deputed IRDA Licensed surveyors M/s Mittal Independent Insurance Surveyors & Loss Assessors Pvt. Ltd. for the survey & assessment of claim.
We are now in receipt of survey report wherein it is observed that reported loss has occurred due to seepage of water from sewerage pipe, occurring over a period of time with none of the perils covered under “Long Term Home Policy/Fire Policy” operating.
Please note that the claim has been intimated under “Long Term Home Insurance Policy” which is a named peril policy & none of insured perils named in the policy has been said to be operated. The extract of the preamble clause of the policy is reproduced herewith for your ready reference”
“We/Company will indemnify You in respect of loss of or damage to the Building specified in the Schedule against perils mentioned under heading ‘Covered Accidents.”
Also requisite document/information has not submitted by you to surveyor/SBIG despite various requests by mail/letter issued from our/surveyor end.
We regret consequently to express our inability to proceed further with the claim and are treating this as No Claim. We would like to place on records our concern for the loss and would look forward to serving you once again in future.
As regards the question whether the claim covered under the policy, Clause 9 of the policy is reproduced as below:
“9. Bursting and/or overflowing of Water Tanks, Apparatus and Pipes.
It is seen that in the technical report regarding the house of the complainant prepared by the official of the municipal corporation, it has been stated as under:-
“Whatever cracks are prevailing in the building, same have occurred due to continued leakage of water in the foundation of the building from sewerage line.”
It is, thus, an admitted position that the cracks have appeared due to continued seepage of water from sewerage / water pipeline.
From a perusal of clause 9 of the insurance policy, it is clear that the clause 9 does not mention anywhere that the clause is applicable only in the context of water tanks situated above the house on the terrace. Hence, the loss is covered under clause 9 of the policy and the insurance company is liable to indemnify the loss. Hence, the repudiation made by the insurance company is unjustified and the complainant is entitled for the compensation.
As regards the quantum of compensation is concerned, the surveyor assessed the net loss of Rs.2,37,650/-. The report submitted by a surveyor is an important piece of evidence and has to be given due weight, though it is not sacrosanct and can be ignored, provided there is cogent evidence otherwise. The complainant has not produced any evidence to show that the assessment made by the Surveyor is not correct except filing a report of valuer, Mr. Hanish Gupta that is prior in time to the surveyor’s report. The State Commission has also accepted the net loss assessed by the surveyor. Hence, the insurance company is liable to pay an amount of Rs. 2,37,650/- towards compensation along with interest at the rate of 6% per annum from the date of repudiation of the claim till the date of actual payment.
In so far as the question raised by the municipal counsel, whether or not the complainant is ‘consumer’ is concerned, we may refer to the Hon’ble Supreme Court’s judgment in the Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers & Ors. IV (2019) CPJ 65 (SC) case wherein the Hon’ble Court has held as under:
To summarize from the above discussion, though a straight- jacket formula cannot be adopted in every case, the following broad principles can be culled out for determining whether an activity or transaction is ‘for a commercial purpose’:
(i) The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, ‘commercial purpose’ is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities.
(ii) The purchase of the good or service should have a close and direct nexus with a profit-generating activity.
(iii) The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary.
(iv) If it is found that the dominant purpose behind purchasing the good or service was for the personal use and consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of ‘generating livelihood by means of self-employment’ need not be looked into.
(emphasis supplied)
In our opinion, the complainant got the site plan sanctioned for building of his house by depositing the requisite fee with the municipal council and the complainant has been paying the water charges for consumption of water supply. No evidence of profit making activity has been brought on record from the alleged shop in the building. Therefore, the complainant is a ‘consumer’ within the definition under Section 2(1)(d)(ii) of the Consumer Protection Act, 1986.
The next question is as to whether the municipal council is deficient in providing services to the complainant.
Considering the facts that the complainant got the sanction of the site plan by depositing the requisite fee for sanction, the complainant has been paying the water charges for consumption and the admitted fact that there was leakage in the water sewerage pipe, we are of the view that the damage to the house was due to leakage of water from the water pipes laid by the municipal council. The contention that the leakage of water pipe in the street was at a distance of 20 feet away has no substance because the municipal council has failed to prove that the leakage was insufficient to cause the damage. It is the prime duty of the municipal council to maintain the water pipes laid down in the streets by rectifying them by inspecting them from time to time. Had the piped been checked or properly maintained, the building would not have been damaged and the loss would not have occurred. Thus, there is deficiency on the part of the municipal counsel in maintaining the water pipes.
Considering the fact that the matter relates to the year 2015 and we are now in 2024, the cost of construction has been increased multiple times, damage was due to leakage of water from the water pipes, we are of the opinion that a compensation of equal amount of Rs. 2,37,650/- lakh on the municipal council is just and appropriate.
In view of the foregoing, the appeal of the complainant is disposed of and the insurance company is directed to pay a sum of Rs. 2,37,650/- along with interest at the rate of 6% per annum from the date of repudiation till payment to the complainant. The municipal council is also directed to pay the equal amount of Rs. 2,37,650/- to the complainant within a period of four weeks from the date of pronouncement of the Order failing which the amount shall be paid with interest at the rate of 9% per annum. The impugned Order dated 01.10.2018 is set aside.